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Value Investing Is Dead? No, Long Live Value!
Posted: Thursday, March 11, 2021

After reaching historic levels of cheapness by the end of 2019, value stocks underperformed growth stocks by a country mile in 2020, setting an all-time record for value’s cheapness relative to growth.1 Given the more-than-decades-long underperformance of value, proclamations of the death of value investing are proliferating as they did during past periods of such underperformance before value again rewarded investors’ patience.2 Such declarations are predicated on a variety of arguments: 1) the concept of book value is flawed (we agree); therefore, the value stocks are unattractive (we disagree); 2) technology has ushered in a new era of winner-take-all platforms and capital expenditure (capex)-light high-growth companies; 3) creative destruction and lax antitrust regulation have created megacap winners and smaller-cap losers of historic proportions; 4) record low interest rates have stifled value investing as an effective investment style; and 5) too many investors are pursuing value investing. In this paper, we believe that we show each of these arguments are misconceptions.

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